INTERNATIONAL DELEGATION TO NAMPO

1. INTERNATIONAL DELEGATION TO NAMPO PRESENTED BY CHRIS THIRION HEAD: PLANNING & PORTFOLIO MANAGEMENT 16 MAY 2011

2. ROLE OF ECAs EXPORT CREDIT AGENCIES AND SPECIFICALLY THE EXPORT CREDIT INSURANCE CORPORATION OF SOUTH AFRICA UNDERWRITES • BANK LOANS • SUPPLIERS CREDITS • INVESTMENTS ABROAD TO ENABLE SOUTH AFRICAN CONTRACTORS TO PARTICIPATE IN CAPITAL GOODS & SERVICES CONTRACTS OTHER COUNTRIES.

3. COUNTRY ANALYSIS • Exposure on African continent of USD 925 million spread over: • Angola 2% • DRC 9% • Gabon 1% • Ghana 4% • Malawi 10% • Nigeria 2% • Mozambique 60% • Sudan 3% • Swaziland 1% • Uganda 3% • Zimbabwe 4% • Zambia 0.5% • Seychelles 0.5%

4. Export Credit South Africa Foreign Country LOAN AGREEMENT # Loan = 85% of SA Contract Price # Interest = LIBOR + 2.50% # Tenor = 2 – 10 years BUYER SA LENDER(S) SUPPLY AGREEMENT # Export Capital Goods/Services # Payment Terms: 15% Down Payment 85% Financial Credit # Delivery Period: up to 36 Months Policy of Insurance # 100% PRI # 85% CRI (Project Finance); ≤ 100% CRI Corp. Buyer IMU Exporter’s Cover GREs SA Exporters Exporter Undertaking Agreement # 50% SA Content or # Qualifying Exporter 4

5. TRADE RISKS • EXPROPRIATION LOSS DUE TO EXPROPRIATORY MEASURES TAKEN BY HOST GOVERNMENT • TRANSFER RESTRICTION LOSS DUE TO ACTION BY HOST GOVERNMENT PREVENTING THE CONVERSION OF LOCAL CURRENCY INTO HARD CURRENCY OR THE TRANSFER OF HARD CURRENCY OUT OF THAT COUNTRY

6. TRADE RISKS (Continue) • WAR & CIVIL DISTURBANCE – LOSS DUE TO ACT OF WAR, CIVIL COMMOTION, TERRORISM AND SABOTAGE • BREACH OF CONTRACT – LOSS DUE TO A MATERIAL BREACH BY HOST GOVERNMENT OF A CONTRACT ENTERED INTO WITH THAT GOVERNMENT • PROTRACTED DEFAULT – LOSS DUE TO PAYMENT DEFAULT BY GOVERNMENT BORROWER/GUARANTOR

7. TRADE RISKS (Continue) • CONTRACTOR NON-DELIVERY– pre shipment • INSOLVENCY – SEQUESTRATION, LIQUIDATION OR JUDICIAL MANAGEMENT OF THE BORROWER • PROTRACTED DEFAULT – AN UNDISPUTED PAYMENT DEFAULT BY THE BORROWER

8. CONCLUSION NOT GETTING PAID! DUE TO: • POLITICAL AND RELATED INTERVENTION • COMMERCIAL OUTCOMES

9. POLITICAL AND RELATED INTERVENTION • EXPROPRIATION • WAR & CIVIL DISTURBANCE • BREACH OF CONTRACT • PROTRACTED DEFAULT • TRANSFER RESTRICTION • NON-CONVERTABILITY

10. CONCLUSION NOT GETTING PAID! DUE TO: • POLITICAL AND RELATED INTERVENTION • COMMERCIAL OUTCOMES

11. COMMERCIAL OUTCOMES • INSOLVENCY SEQUESTRATION, LIQUIDATION OR JUDICIAL MANAGEMENT OF THE BORROWER • PROTRACTED DEFAULT AN UNDISPUTED PAYMENT DEFAULT BY THE BORROWER

12. TRADE ACTIVITIES EXPOSED TO RISKS • EXPORT CREDIT • SUPPLIERS CREDIT • FINANCIAL CREDIT • INVESTMENTS • EQUITY INVESTMENTS • SHAREHOLDERS LOANS • COMMERCIAL LOANS

13. EXPORT CREDIT SUPPLIERS CREDIT CREDIT TO FOREIGN BUYER GIVEN BY EXPORTER TRADE RISKS INVOLVED: • PRE-SHIPMENT - POLITICAL • POST-SHIPMENT - POLITICAL AND COMMERCIAL MITIGATION: • PRE-SHIPMENT PRI COVER PREVENTING EXPORT DUE TO POLITICAL EVENT IN COUNTRY OF DESTINATION • POST-SHIPMENT PRI AND CRI COVER ENSURING PAYMENT IS RECEIVED TO A LEVEL OF 100% OR 85% FOR PRI AND CRI RESPECTIVELY

14. TRADE ACTIVITIES EXPOSED TO RISKS • EXPORT CREDIT • SUPPLIERS CREDIT • FINANCIAL CREDIT • INVESTMENTS • EQUITY INVESTMENTS • SHAREHOLDERS LOANS • COMMERCIAL LOANS

15. EXPORT CREDIT FINANCIAL CREDIT RECOURSE OR NON-RECOURSE LOANS PROVIDED TO FOREIGN BUYERS TO PROCURE CAPITAL GOODS & SERVICES FROM SOUTH AFRICAN EXPORTERS/ CONTRACTORS TRADE RISKS INVOLVED: FINANCIAL INSTITUTION EXPOSED TO POLITICAL AND COMMERCIAL RISKS ON OUTSTANDING LOAN ADVANCED MITIGATION: • POST-SHIPMENT PRI AND CRI COVER AGAINST NON-PAYMENT TO A LEVEL OF 100% PRI AND FROM 85% UP TO 100% CRI ON LOAN ADVANCED

16. TRADE ACTIVITIES EXPOSED TO RISKS • EXPORT CREDIT • SUPPLIERS CREDIT • FINANCIAL CREDIT • INVESTMENTS • EQUITY INVESTMENTS • SHAREHOLDERS LOANS • COMMERCIAL LOANS

17. INVESTMENTS EQUITY INVESTMENT INVESTOR MAKING AN EQUITY INVESTMENT IN A FOREIGN ENTITY FOR THE PURPOSE OF EXPANDING OR DIVERSIFYING ITS BUSINESS SHAREHOLDER LOAN SHAREHOLDER ADVANCING A LOAN TO THE FOREIGN ENTITY COMMERCIAL LOAN FINANCIAL INSTITUTION PROVIDE A COMMERCIAL LOAN TO FOREIGN GOVERNMENT OR PRIVATE SECTOR ENTITY TO EXPAND BUSINESS, INFRASTRUCTURE, DEVELOPMENT OF A NEW PROJECT, EXPANDING OF EXISTING PROJECT

18. INVESTMENTS TRADE RISKS INVOLVED: EQUITY INVESTMENT • INTERVENTION BY FOREIGN GOVERNMENT RESULTING IN BUSINESS NOT BEING ABLE TO OPERATE AS ENVISAGED OR NOT MAKING PROFITS FOR A CONSECUTIVE PERIOD OF THREE YEARS • NOT BEING ABLE TO REPATRIATE CAPITAL AND DIVIDENDS SHAREHOLDERS LOAN– NOT BEING ABLE TO REPATRIATE THE LOAN AS WELL AS INTEREST EARNED COMMERCIAL LOAN– NOT BEING ABLE TO REPATRIATE THE LOAN AS WELL AS INTEREST EARNED MITIGATION: • INSURANCE COVER UP TO 90% OF THE INVESTMENT (ACTUAL CASH EQUITY), SHAREHOLDER LOAN OR COMMERCIAL LOAN • INSURANCE COVER UP TO 90% OF DIVIDENDS OR INTEREST (NOT EXCEEDING IN AGGREGATE THE AMOUNT OF CASH EQUITY INVESTED OR CAPITAL AMOUNT OF LOAN)

19. LEVELS OF COVER Cover up to 90% should the required % SA content be achieved SA Content: • Materials less imported component • Wages & salaries (paid in SA) • Freight costs (paid in SA) • Insurance premiums (issued in SA) • Finance charges (excluding post delivery) • Fees & charges & profits

20. SA LOCAL CONTENT POLICY No minimum % applies to projects in Africa: • Exporter to be resident in SA as defined in terms of Income Tax Act no 58 of 1962 • Exporter must have entered into export contract with foreign buyer • Exporter must have financial & technical means • Exporter to achieve minimum score of 30% in terms of the Broad Based Black Economic Empowerment Scorecard 50% SA local content applies to rest of the world as well as to projects in Africa if the BBBEE scorecard cannot be met

21. ECIC Worldwide Exposure 21

22. ASSISTANCE TO SMEs • Performance Bond Insurance • Supplier’s Credit for Small Medium Transactions

23. PERFORMANCE BOND INSURANCE • Developed in partnership with IDC; • Focus on SMMEs facing financing capacity hindrances; • Enable SMMEs to participate in exports of capital goods & services;

24. PERFORMANCE BOND INSURANCE Product Criteria: • Bond value to 10% of contract price • Bond callable on demand • SMMEs to benefit (National Small Enterprise Act, Act 102 of 1996) • Export contract value not exceeding USD10 million • Credit term two years or more

25. ASSISTANCE TO SMEs • Performance Bond Insurance • Supplier’s Credit for Small Medium Transactions

26. SUPPLIER’s CREDIT FOR SMALL MEDIUM TRANSACTIONS • Rationale for the development of the product • Improve turnaround times for concluding and financing of small & medium transactions • To cater for transactions ranging from US$1million to US$ 20 million more effectively

27. SUPPLIER’s CREDIT FOR SMALL MEDIUM TRANSACTIONS • Rationale for the development of the product (continue) • To assist small to medium exporters to offer their clients credit that is simple and quick to implement • To create jobs in SA and to stimulate economic growth • To improve ECIC competitiveness in the market

28. Local Banks ABSA First Rand Investec Standard Nedbank IDC International Banks Royal Bank of Scotland Standard Chartered Citibank Deutsche Bank Credit Agricole 2009 SUPPPORT AGREEMENT

29. THANK YOU Chris Thirion cthirion@ecic.co.za www.ecic.co.za +2712 471-3800 29